Correlation Between Pha Lai and Truong Thanh

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Can any of the company-specific risk be diversified away by investing in both Pha Lai and Truong Thanh at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pha Lai and Truong Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Lai Thermal and Truong Thanh Furniture, you can compare the effects of market volatilities on Pha Lai and Truong Thanh and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pha Lai with a short position of Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Truong Thanh.

Diversification Opportunities for Pha Lai and Truong Thanh

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Pha and Truong is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture and Pha Lai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pha Lai Thermal are associated (or correlated) with Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Pha Lai i.e., Pha Lai and Truong Thanh go up and down completely randomly.

Pair Corralation between Pha Lai and Truong Thanh

Assuming the 90 days trading horizon Pha Lai Thermal is expected to generate 0.61 times more return on investment than Truong Thanh. However, Pha Lai Thermal is 1.63 times less risky than Truong Thanh. It trades about 0.08 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about -0.3 per unit of risk. If you would invest  1,120,000  in Pha Lai Thermal on October 30, 2024 and sell it today you would earn a total of  10,000  from holding Pha Lai Thermal or generate 0.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pha Lai Thermal  vs.  Truong Thanh Furniture

 Performance 
       Timeline  
Pha Lai Thermal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pha Lai Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Pha Lai is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Truong Thanh Furniture 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Truong Thanh Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Truong Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pha Lai and Truong Thanh Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pha Lai and Truong Thanh

The main advantage of trading using opposite Pha Lai and Truong Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Truong Thanh can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Truong Thanh will offset losses from the drop in Truong Thanh's long position.
The idea behind Pha Lai Thermal and Truong Thanh Furniture pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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